A brief diversion to some background points. A private securitization market suddenly came to dominate housing finance from 2004 to 2007 before collapsing and disappearing. That market was prone to a boom and bust cycle, and that tendency was heightened by use of overnight repo financing and credit derivatives related to those markets. That is one of the conventional reactions to the Great Recession housing bust that has some truth to it.
Yes! There were all those scare-charts of the “coming wave of rate resets” that were going to create a crisis. The rate resets never came, but the story was already written. It’s really amazing. 2008 was a mass confirmation bias event.
Bernanke caused the GFC, by restricting the truistic monetary base, or required reserves, for 29 contiguous months. The money stock was restricted for 48 months.
Powell has restricted the means-of-payment money stock for 21 months. If Powell continues with holding the money stock constant, house prices will show their greatest declines in just another couple of months (>3 months).
One of the 19 things that gets me is that all the predictions started with "once interest-rates rise". But they didn't rise. They fell.
Yes! There were all those scare-charts of the “coming wave of rate resets” that were going to create a crisis. The rate resets never came, but the story was already written. It’s really amazing. 2008 was a mass confirmation bias event.
You are brave to keep going on this topic. Any conversations I've had lead to people getting angry.
Bernanke caused the GFC, by restricting the truistic monetary base, or required reserves, for 29 contiguous months. The money stock was restricted for 48 months.
Powell has restricted the means-of-payment money stock for 21 months. If Powell continues with holding the money stock constant, house prices will show their greatest declines in just another couple of months (>3 months).